Or is it a less desirable neighborhood that may only attract rental investors?

Our real estate background consists of pretty much nothing other than being home owners and having a great desire to make money as investors.

One is asking 94K, and the other a pre foreclosure at 119k -- I've offered half price on each, using the standard equation with 100 desired monthly cf and 50% expenses and 5k cap improvments, but these cap imp. come from needing a roof MAYBE in 5-7 years, or same with furnace.

But, I do want an area that maximizes my return.When I hear a new investor talk about "nice areas" I'm not sure they've made the leap from a house to live in to a house to make money.Here's my really simple pricing approach.1) Figure out the market rent.2) Divide by 2 to factor out expenses (though I take out 40% instead of 50%)3) Subtract desired cash flow, typically $1004) This is your maximum P&I payment.

We have consulted with true investors in the past and shared COGS with them and our mark up rates to achieve desired profit.

I think that luck though manifests itself out of desire within one's self to have or be something.

Just make sure they have a good amount of equity, and a desire to sell.

Finally, decide how you can make your rental more 'desirable'.

Investors will be able to gobble up the REOs, since those homes are no as desirable to a new homeowner.

I am not an economist, and have no desire to become one, but I have made a commitment to learn a lot more about micro/macro economics so that I can better understand how money works, and hopefully improve myself, and my business, in the process.